Firm specific determinants of open innovation in European SMEs

Abstract

To manage the changing innovation landscape a key strategic decision for owner-managers of SMEs is the extent to which they adopt open innovation. Extant research however has tended to study open innovation processes in terms of a binary distinction- either open or closed. The purpose of this paper is to move beyond this dichotomous framing and identify the extent of openness in the innovation processes of SMEs in Europe. Furthermore, the study explores the association between internal firm-specific factors related to the capabilities and strategies of the firm and open innovation in SMEs. This study explores if (a) innovation objectives, (b) innovation activities, and (c) innovation expenditures, influence the extent of openness in the innovation process in SMEs. Drawing on data from the 6th Community Innovation Survey (CIS) of 9,949 SMEs from nine European countries, hypotheses are tested using hierarchical multiple regression analysis. The study contributes to the literature by showing that the extent of openness in the innovation process is low for European SMEs. SMEs are more likely to be characterised by higher levels of openness in their innovation if they prioritise product/process innovation objectives, conduct internal R&D, purchase/license external knowledge, and commitment more financial resources to innovation.